Factoring (SAP Business One)

Factoring is a form of short-term corporate financing in which a company can sell its outstanding requirements (e.g. from sales of goods on target) to a factoring company (the "factor"). As a result, the company receives immediate liquidity - usually a discount on the invoice value - and at the same time transfers the risk of a bad debt loss (in the case of "genuine factoring") to the factor.

In SAP Business One, factoring is functionally supported by the Factoring Indicator mapped in the business partner master record. The automated redirection of payment flows and the transparent mapping in journals and reports enable a professional and comprehensible implementation of this form of financing in the system.

Functions of factoring

Financing function: Immediate cash inflow from the sale of the Demand.
service function: The factor takes over receivables management.
Del credere function: Assumption of the default risk by the factor.

Factoring in SAP Business One

SAP Business One offers the option of mapping factoring transactions in the system - in particular through the use of the so-called "Factoring Indicator".

Key features

Factoring Indicator in the Business partner base:
In the Master data of a business partner ("General" tab), a factoring indicator can be stored. This defines that receivables from this customer have been assigned to a factor.
Automatic redirection of payments:
If a factoring indicator is set, then incoming payments are no longer assigned to the customer accountbut the account of the factor (creditor). The payment is therefore made directly to the factor.
Use in journal entries and reports:
The Factoring Indicator is calculated in journal entries carried along and can be used in reports as Filter criterion can be used. This makes it possible to analyse all transactions that fall under factoring.
Key financial indicators (KPIs):
In the area of Customer receivables (Accounts Receivables), there are KPIs that include factoring - for example by taking assigned receivables into account separately.

Technical note

The exact data source for factoring indicators in the SAP Business One database is not clearly documented. Sources cite both OADT and OIDC, but these relate to different system areas.